BHP forecasts over 7pc China growth

BHP Billiton
has become more bullish about the potential for its aggressive push into booming agricultural markets through potash, revealing encouraging exploration results on land surrounding its $US15 billion ($16 billion) Jansen project in Canada.

At BHP’s annual general meeting in Perth on Thursday, chief executive
Andrew Mackenzie
said confidence in its Jansen potash asset had grown after more exploration work on nearby land.

“On its own, Jansen is probably not a big enough resource for us to be a business that would rival our other four pillars. We need several Jansens and we have been very fortunate and planned that well in acquiring a lot of land in Saskatchewan which overlies several Jansens," he said.

“We have spent a bit of money exploring to understand what we have. The news is good. We feel very confident we have many more Jansens that future generations of management can consider."

BHP surprised the market in August with plans to spend $US2.6 billion on the project in the next three years. The global resources group is in discussions with several parties about partnering to develop the project.

While it is bullish on developing its potash business, BHP is under pressure to rationalise its portfolio and deliver higher returns to shareholders rather than embark on risky expansions.

BHP chairman
Jac Nasser
stressed to investors that as the company looked to sell assets, it would remain firm on value.

“We are in a cyclical business and you can sell at the wrong time and buy at the wrong time. Many of us have done that in the past and we want to be extra careful and measure twice and cut once on this," he said.

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“We will not speculate on nickel or any other part of our portfolio. Only to say that, directionally, simplification to a point is good and value is good but so is diversification. You have to have the balance right."

BHP has completed close to $US7 billion of divestments recently.

In a four-hour meeting filled with queries on how BHP was addressing climate change, Mr Nasser said BHP was the best resources company to invest in, given its diversification in commodities.

Mr Mackenzie stressed it would not branch out in to renewable technologies such as wind farms or solar because BHP’s strength was geology and mining, not engineering.

Mr Mackenzie said BHP had met the government about its Direct Action plan to address carbon pollution.

“We are working very keenly with them as to what we can do with their Direct Action measure that will, I think, protect the competitiveness of trade-exposed industries across Australia, not just ours," he said.

“Really understand how we can drive emissions reductions and these are reductions that are going to be replicated across the world . . . there is no point in giving up carbon dioxide in Australia only to find that carbon dioxide will be emitted less efficiently elsewhere."